The proportion of additional income that consumers spend is known as the
A) marginal propensity to save.
B) marginal propensity to consume.
C) average propensity to save.
D) average propensity to consume.

Question

Quizplus · Accepted Answer

The proportion of additional income that consumers spend is known as the marginal propensity to consume (MPC). The MPC represents the fraction of each additional dollar of income that is spent on consumption. Choices A, C, and D are not correct because they refer to other economic concepts.

The Proportion of Additional Income That Consumers Spend Is Known